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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934 (No Fee Required)
For the fiscal year ended DECEMBER 31, 1996.
OR
[ ] Transition report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (No Fee Required)
For the transition period from ________ to ________
Commission file number 0-11309.
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
GALILEO CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
GALILEO CORPORATION
GALILEO PARK, P. O. BOX 550
STURBRIDGE, MASSACHUSETTS 01566
Financial Statements of the Plan
- --------------------------------
Report of Independent Auditors.
1. Statements of Financial Condition.
2. Statements of Changes in Plan Equity.
3. Notes to Financial Statements.
Exhibit
- -------
Consent of Ernst & Young to the incorporation by reference in the Registration
Statements (Form S-8 No. 33-7702, No. 333-23345, No. 333-23347) pertaining to
Employee Stock Purchase Plans and a stock option plan of Galileo Corporation
and in the related Prospectus to our report dated March 7, 1997, with respect
to the financial statements of the Galileo Corporation Employee Stock Puchase
Plan included in this Annual Report (Form 11-K) for the year ended December 31,
1996.
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SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, the Trustee has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
GALILEO CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
By: /s/ Josef W. Rokus
-----------------------------------------
Josef W. Rokus
Vice President, Corporate Development
Date: March 27, 1997
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FINANCIAL STATEMENTS
GALILEO CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
YEARS ENDED DECEMBER 31, 1996 AND 1995
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Galileo Corporation
Employee Stock Purchase Plan
Financial Statements
Years ended December 31, 1996 and 1995
CONTENTS
Report of Independent Auditors.............................................. 1
Audited Financial Statements
Statements of Financial Condition.......................................... 2
Statements of Changes in Plan Equity....................................... 3
Notes to Financial Statements.............................................. 4
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Report of Independent Auditors
The Employee Stock Purchase Plan Committee
Galileo Corporation
Employee Stock Purchase Plan
We have audited the accompanying statements of financial condition of the
Galileo Corporation Employee Stock Purchase Plan as of December 31, 1996 and
1995, and the related statements of changes in plan equity for each of the three
years in the period ended December 31, 1996. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Galileo Corporation
Employee Stock Purchase Plan at December 31, 1996 and 1995, and the changes in
its plan equity for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Providence, Rhode Island
March 7, 1997
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Galileo Corporation
Employee Stock Purchase Plan
Statements of Financial Condition
DECEMBER 31
1996 1995
-------------------------
ASSETS
Investment in common stock at market (cost of
$166,825 and $191,196 at 1996 and 1995,
respectively)(Notes 4 and 6)
$534,936 $279,139
Cash and cash equivalents 3,600 1,201
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Total assets $538,536 $280,340
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LIABILITIES AND PLAN EQUITY
Accounts payable $ - $ 5,204
Amounts due to the Company 63,305 21,750
Plan equity:
Vested 475,231 227,680
Nonvested - 25,706
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Total plan equity 475,231 253,386
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Total liabilities and plan equity $538,536 $280,340
=========================
See accompanying notes.
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Galileo Corporation
Employee Stock Purchase Plan
Statements of Changes in Plan Equity
YEAR ENDED DECEMBER 31
1996 1995 1994
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Interest income $ 55 $ 24 $ 27
Net appreciation (depreciation) in fair
value of investments (Note 4) 280,168 175,483 28,388
Realized gain (loss) on shares sold
(Note 5) 66,231 149 (13,337)
Contributions:
Employee 24,168 15,739 17,994
Employer 10,142 6,540 7,627
Forfeitures (41,555) (15,767) (3,382)
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Net contributions (7,245) 6,512 22,239
Withdrawals (117,364) (16,562) (60,446)
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Increase (decrease) in plan equity 221,845 165,606 (23,129)
Plan equity at beginning of year 253,386 87,780 110,909
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Plan equity at end of year $ 475,231 $253,386 $ 87,780
====================================
See accompanying notes.
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Galileo Corporation
Employee Stock Purchase Plan
Notes to Financial Statements
December 31, 1996 and 1995
1. DESCRIPTION OF PLAN
Galileo Corporation (the Company) adopted an Employee Stock Purchase Plan (the
Plan) on June 18, 1986, pursuant to which employees may purchase shares of the
Company's common stock through payroll deductions and receive partially matching
contributions from the Company to purchase additional common stock. In addition
to payroll deductions, employees are allowed to make direct contributions to the
Plan.
Any full-time employee of the Company is eligible to participate in the Plan if
he or she is at least eighteen years of age and has been employed by the Company
for twelve consecutive months. In addition, any part-time employee who meets the
same age requirements and has been in the Company's employ for twenty-four
consecutive months is eligible. Participation in the Plan is strictly voluntary.
The Plan is administered by a committee appointed by the Board of Directors of
the Company.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Investments in common stock of the Company are purchased in the open market.
Shares are carried at market value based upon the latest reported sales price.
Monthly stock purchases are recorded at the average of the market values during
the month. Realized gains and losses are determined on an average cost basis.
ADMINISTRATIVE EXPENSES
All expenses of the Plan are paid by the Company.
CONTRIBUTIONS
In any given year, the maximum amount of contributions that a participant may
make is $1,000. Matching employer contributions are made on a sliding scale as
follows:
50% First $250
40% Second $250
30% Last $500
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Galileo Corporation
Employee Stock Purchase Plan
Notes to Financial Statements
December 31, 1996 and 1995
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAX STATUS
The Plan is a nonqualified profit-sharing plan under the Internal Revenue Code
of 1986 (the Code). Company contributions are tax deductible expenses for the
Company at the time the participant's interest in the contributions vest.
Company contributions will result in taxable ordinary income to participants
when their interests in such contributions are vested. Hence, the Plan itself is
not subject to income taxes.
The Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974, which relates to the protection of employee benefit
rights, because it is not a plan of deferred compensation and is not subject to
Section 401(a) of the Code.
3. VESTING AND BENEFITS
Common stock purchased with a participant's contributions becomes vested in the
participant's account immediately. Common stock purchased with Company
contributions becomes vested in the participant's account on January 1 of the
second plan year following the plan year during which such contributions are
made. Additional shares resulting from a stock split or stock dividend vest
immediately. A participant's account derived from Company contributions will
also vest upon his or her sixty-fifth birthday, upon early retirement with
twenty years of service, disability or death, or upon termination of the Plan.
If a participant makes withdrawals, the unvested portion of his or her account
will be forfeited proportionately to the amount of vested shares withdrawn.
Forfeitures are repayable to the Company or may be used by the Company to
offset future Company contributions.
Upon retirement at age sixty-five, the participant shall be entitled to receive
the entire number of shares of common stock held in his or her account and cash
equal to the value of any fractional share, including any portion which would
not otherwise be vested at that time.
At December 31, 1996 and 1995, there were 78 and 81 Plan participants,
respectively.
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Galileo Corporation
Employee Stock Purchase Plan
Notes to Financial Statements
December 31, 1996 and 1995
4. NET APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS
Investments consisted of 21,291 shares, 26,905 shares, and 26,598 shares, of the
Company's $.01 par value common stock at December 31, 1996, 1995 and 1994,
respectively. The cost of such shares amounted to $166,825, $191,196, and
$190,607, at December 31, 1996, 1995 and 1994, respectively. Net unrealized
appreciation (depreciation) of investments is as follows:
Balance at December 31, 1993 $(115,928)
Change for the year 28,388
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Balance at December 31, 1994 (87,540)
Change for the year 175,483
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Balance at December 31, 1995 87,943
Change for the year 280,168
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Balance at December 31, 1996 $ 368,111
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5. REALIZED GAINS AND LOSSES
The realized gain (loss) on shares sold was determined as follows:
AVERAGE REALIZED
COST PROCEEDS GAIN (LOSS)
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Year ended December 31, 1994 $27,266 $13,929 $(13,337)
Year ended December 31, 1995 $ 5,957 $ 6,106 $ 149
Year ended December 31, 1996 $33,309 $99,540 $ 66,231
6. SUBSEQUENT EVENTS
The market value of a share of the Company's common stock has decreased from $25
1/8 at December 31, 1996 to $7 1/4 at March 7, 1997. Had this market price been
reflected in the financial statements, the value of the plan investments would
be $154,360.
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Galileo Corporation
Employee Stock Purchase Plan
Notes to Financial Statements
December 31, 1996 and 1995
6. SUBSEQUENT EVENTS (CONTINUED)
Effective January 1, 1997, the Company adopted the 1997 Employee Stock Purchase
Plan ("New Plan"), a Section 423 stock purchase plan. All participants in the
Plan will automatically (1) become participants in the New Plan, and (2) become
vested in all shares in the New Plan. The net assets of the Plan will be
transferred to the New Plan during the first quarter of 1997.
The New Plan provides quarterly offering dates which establish offering
periods during which employees may make contributions to the Plan through
payroll deduction with an annual maximum of $25,000 of shares of the Company's
stock at a 15% discount off the lower of the fair market value of the Company's
stock at the beginning or end of the offering period. The Company will
contribute to the New Plan an amount equal to the 15% discount. The Company
will have no other contribution requirement.
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Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-7702, No. 333-23345, No. 333-23347) pertaining to Employee
Stock Purchase Plans and a stock option plan of Galileo Corporation and in the
related Prospectus of our report dated March 7, 1997, with respect to the
financial statements of the Galileo Corporation Employee Stock Purchase Plan
included in this Annual Report (Form 11-K) for the year ended December 31,
1996.
ERNST & YOUNG LLP
Providence, Rhode Island
March 26, 1997
